Exclusive: Q2 2015 US Retail Forex Profitability Report, Profits and Accounts Down
The Q2 US profitability and active trader report showed IB remaining on top, while US accounts and profitability at other
Being released today is the Finance Magnates’ Q2 2015 US Retail Forex Profitability and Active Accounts report. During the quarter, average US customer profits declined on both a weighted and non-weighted calculation. On a weighted basis, 36.2% of US forex traders were profitable in Q2, compared to 36.4% in Q1. Similarly, non-weighted calculations showed profitability of customers at the average broker at 32.3%, which declined from 33.8% in Q1.
The non-weighted figure, which calculated broker averages equally and doesn’t take into account the number of their customers, was effected negatively by TraderStation. During the quarter, only 24.6% of TradeStation customers achieved profits in their accounts, compared to 32.5% in Q1. The decline was notable for the broker as their customers have typically reported profitability in the 32% to 38% range in previous reports.
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Falling Account Figures
Dipping to a multi-year low, active account figures in the US dropped 4.0% from Q1 to 91,811. During the Q2 period, yet another forex broker exited the US market. This time around it was giant Citigroup, which closed its entire CitiFX Pro retail forex unit, with US account holders being transferred to FXCM. The exit of Citigroup could be considered a symbol of the overall US industry, which continues to experience a multi-year trend of contraction of active traders in the country.
Among retail forex brokers remaining in the US, only InteractiveBrokers (IB) revealed an increase in accounts, growing active traders by 4.4% to 31,732. The top forex broker in the US for both active traders and profitability (46.5%), IB’s overall brokerage business has had a solid first half of 2015. Despite absorbing a greater than $100 million loss due to January’s Swiss franc move, the broker has reported strength in its forex, stock and futures trading business, with the firm’s stock price outperforming peers and hitting all-time highs.
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In contrast to IB, both OANDA and FXCM reported a sharp decrease in active traders during Q2, with client numbers dropping over 9% at each broker. Asked about the decline, a representative at FXCM declined to provide an explanation to Finance Magnates about the active trader changes in their US business.
At OANDA, the broker attributed the decline in US active traders to the migration of non-US account holders to foreign entities. Answering to Finance Magnates, Drew Izzo, CMO at OANDA stated, “The reduction reported amongst our US client base is a reflection of a proper migration of foreign customers to their appropriate entities. Tracking customer moves to the appropriate domicile provides them access to the best possible product set based on the region they currently reside in, something we’re committed to here at OANDA.” Izzo added that overall, OANDA’s global client figures are growing.
(Note: Figures for MB Trading are estimates)
Previous Reports: Q1, 2015, Q4 2014, Q3 2014, Q2 2014, Q1 2014, Q4 2013, Q3 2013, Q2 2013, Q1 2013, Q4 2012, Q3 2012, Q2 2012, Q1 2012
The elephant in the room is the fact that CFTC offers no mandatory segregation of retail client funds from the broker’s operating expenses.
@AUFX – trend is for new smaller firms being opened by people with existing books of clients to launch in cheaper registration jurisdictions like Mauritius and Belize. For such firms, they already have existing relationships with many of their IBs and clients, so the ‘marketing’ need of saying they are EU or UK regulated is less important for their short term goals.
@AUFX – trend is for new smaller firms being opened by people with existing books of clients to launch in cheaper registration jurisdictions like Mauritius and Belize. For such firms, they already have existing relationships with many of their IBs and clients, so the ‘marketing’ need of saying they are EU or UK regulated is less important for their short term goals.
The average retail customer is slowly wising up to the concepts of market making. Without a regulatory oversight – like the stock markets – its a broker;s way or the high way.